[2009] HCA 25
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
[2011] HCA 11
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357
Source
Original judgment source is linked above.
Catchwords
[2014] HCA 14
Barclays Bank Ltd v WJ Simms, Son & Cooke (Southern) Ltd [1980] 1 QB 677
Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592[2004] HCA 60
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304[2009] HCA 25
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353[2011] HCA 11
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357
Judgment (26 paragraphs)
[1]
Solicitors:
Piper Alderman (Plaintiff)
CCK Lawyers (First and Second Defendants)
File Number(s): 2018/175764
[2]
Judgment
The plaintiff, Hudson Resources Limited, is a public company that was, in 2014, listed on the Australian Stock Exchange.
On 27 June 2014, Hudson Resources entered into a Sale and Purchase Agreement with the first defendant, AceA Resources Pte Limited, a company incorporated in Singapore, pursuant to which:
1. Hudson Resources agreed to sell to AceA 22.6 million ordinary shares in Tiaro Coal Limited for $3,051,000; and
2. AceA agreed to sell to Hudson Resources 10 million ordinary shares in Mount Adrah Gold Limited for $2 million.
I will refer to this agreement as the "First SPA".
The First SPA provided that Hudson Resources and AceA would set off the Tiaro Coal purchase price against the Mount Adrah purchase price so that, at closing, AceA would pay Hudson Resources $1,051,000, being the difference between the two.
The third defendant, Mr Aw Cheok Huat, also known as Mr Mick Aw, was, in June 2014, a director of AceA and the chairman of AceA's parent company, ICP Limited, a company listed on the Singapore Stock Exchange.
Also on 27 June 2014, Mr Aw entered into a Sale and Purchase Agreement with Hudson Corporate Limited. I will call this agreement the "Second SPA".
Pursuant to the Second SPA, Mr Aw agreed to sell to Hudson Corporate, for a total consideration of $1,050,000:
1. 200,000 ordinary shares in Raffles Capital Limited;
2. 3 million ordinary shares in Hudson Resources;
3. 1.5 million ordinary shares in Sovereign Gold Company Limited; and
4. 250,000 ordinary shares in Precious Metal Resources Limited.
The relationship between the various members of the "Hudson Group of Companies" in 2014, including Hudson Resources, Hudson Corporate and Raffles Capital is set out in the attached corporate chart. MFI-2 - Corporate Chart (157503, pdf)
As can be seen from the chart, the ultimate parent entity of the group was Pacific Portfolio Investments Pty Limited and the parent entity of both Hudson Resources and Hudson Corporate (the latter via Hudson Investment Group Limited) was Raffles Capital.
Mr Vincent Tan was, in 2014, a director of Pacific Portfolio, Raffles Capital and Hudson Corporate. Mr Tan is presently a director of Hudson Resources, but was not a director in 2014.
The only shareholders in Pacific Portfolio were Ms Cecilia Tan and Ms Luisa Tan. Ms Luisa Tan is Mr Tan's daughter. The evidence does not reveal Ms Cecilia Tan's relationship with Mr Tan. She shares his residential address.
Hudson Resources claims that it entered into the First SPA as a result of the misleading or deceptive conduct of AceA and its agent, the second defendant, Mr Juay Sze Sin (also known as Mr Bernard Juay).
Mr Juay is an accountant, based in Singapore. With Mr Aw, he is a director of MS Corporate Finance Pte Limited, a corporate advisory firm based in Singapore.
Hudson Resources seeks orders that:
1. AceA and Mr Juay pay it compensation pursuant to ss 236 and/or 237 of Schedule 2 of the Competition and Consumer Act 2010 (Cth) [1] by reason of their alleged misleading or deceptive conduct and consequent contravention of s 18 of Australian Consumer Law; and
2. Mr Aw pay it $1,050,000 on the basis that that sum was paid to him under a mistake of fact in the circumstances I set out below.
Hudson Resources' claim against AceA and Mr Juay is based on Mr Juay's conduct on 27 June 2014 relating to changes made to the First SPA.
Hudson Resources' claim against Mr Aw arises from a payment instruction ("the Payment Instruction") drafted by Mr Juay and sent to Mr Tan on 27 June 2014. The Payment Instruction was executed by a director of Hudson Resources, Mr Benjamin Amzalak on 30 June 2014. It resulted in the $1,051,000 payable by AceA to Hudson Resources under the First SPA being paid to Mr Aw. Mr Aw accepted that sum in satisfaction of the $1,050,000 due to him from Hudson Corporate under the Second SPA.
The shares the subject of the First SPA and the Second SPA were transferred as required by those agreements.
That is:
1. Hudson Resources transferred to AceA its shares in Tiaro;
2. AceA transferred to Hudson Resources its shares in Mount Adrah; and
3. Mr Aw transferred to Hudson Corporate his shares in Raffles Capital, Hudson Resources, Sovereign Gold and Precious Metal Resources.
[3]
The hearing
The hearing was conducted over five days on Microsoft Teams.
The parties co-operated to ensure this process proceeded smoothly and with only minimal interruption.
I was grateful for the assistance I received from Mr Condon SC, who appeared with Mr Bender for Hudson Resources, and Mr Hughes, who appeared with Ms Thrift for AceA, Mr Juay and Mr Aw; particularly for their careful closing submissions.
Much of what follows, especially as to uncontroversial background matters, is drawn, with gratitude, from those submissions.
[4]
Decision
Hudson Resources has not established that Mr Juay, and thus AceA engaged in misleading or deceptive conduct, nor that any conduct of Mr Juay or AceA misled Hudson Resources or caused it any loss.
Nor has Hudson Resources established that it executed the Payment Instruction as a result of a mistake, whether induced by Mr Juay or otherwise.
Indeed, I am affirmatively satisfied that Mr Juay did not behave in a manner that warrants any criticism of him.
The proceedings should be dismissed.
[5]
The change to the First SPA
As I have set out above,
1. the First SPA required the payment of $1,051,000 by AceA to Hudson Resources at settlement; and
2. the Second SPA required the payment of $1,050,000 by Hudson Corporate to Mr Aw at settlement.
The change that was made to the First SPA, and that is central to this case, was made to cl 3.1, which specified what was to happen on closing.
In the drafts of the First SPA prior to 27 June 2014, cl 3.1 read, relevantly:
"3.1 Closing
Closing shall take place at the office of KhattarWong LLP or at such other place as the parties may agree in writing on the Closing Date where all of the events described below shall occur.
3.1(a) Vendor's Deliveries
…
3.1(b) AceA's Deliveries
At Closing, the AceA shall deliver to Hudson [Resources] the following:
(i) duly executed transfer of Tiaro Sale Shares in favour of the AceA accompanied by the share certificate(s) in respect of the Adrah Share Sales;
(ii) the AceA's Board Resolution approving the sale of the Adrah Sale Shares to the Hudson;
(iii) a cashier's order in the sum of A$1,051,000 of the Tiaro Purchase Price drawn in favour of Hudson or such person nominated by Hudson".
KhattarWong LLP, referred to in the chapeau to cl 3.1, is a Singapore law firm.
In a version of the First SPA created on 27 July 2014, cl 3.1(b) was amended, and a new cl 3.1(c) was inserted. I will refer to this version as the "Amended First SPA". The amendments were as follows, with the changes highlighted in revision mode for the purposes of illustration:
"3.1(b) AceA's Deliveries
At Closing, the AceA shall deliver to Hudson [Resources] the following:
(i) duly executed transfer of Tiaro Sale Shares in favour of the AceA accompanied by the share certificate(s) in respect of the Adrah Share Sales;
(ii) the AceA's Board Resolution approving the sale of the Adrah Sale Shares to the Hudson;
(iii) a cashier's order in the sum of A$1,051,000 of the Tiaro Purchase Price drawn in favour of Hudson or such person nominated by Hudson;
(iv) any other documents.
3.1(c) At closing, AceA shall pay the sum of $1,051,000 of the Tiaro Purchase Price to the following account:
Name of Bank: United Overseas Bank Ltd
Name of Account: KhattarWong LLP - Clients A/c
[Account details]".
The effect of this change was that, on closing of the First SPA, instead of AceA providing a cashier's cheque in the sum of $1,051,000 to Hudson Resources or its nominee at the offices of KhattarWong, it was to pay the $1,051,000 into KhattarWong's "client account": that is, its trust account.
[6]
Hudson Resources
As I have said, Hudson Resources was, in 2014, a member of the Hudson Group of Companies. Its registered office at the time was at Level 2, Hudson House, 131 Macquarie Street, Sydney.
At the time, its directors were:
1. Mr Benjamin Amzalak;
2. Mr Tan Sri Ibrahim Menudin;
3. Mr Richard Yap;
4. Ms Louisa Tan; and
5. Mr Peter Meers.
Its Secretary was Mr Julian Rockett. Its Chief Financial Controller was Mr Francis Choy.
In addition, it is agreed on the pleadings that the following persons were agents of Hudson Resources:
1. Mr Tan;
2. Mr Rockett; and
3. Mr Henry Kinstlinger, whose position was described as Investor Relationship Officer.
[7]
Hudson Corporate
Hudson Corporate was the counter party to Mr Aw in the Second SPA and, as the corporate chart referred to at [8] above shows, was at the relevant time a wholly-owned subsidiary of Hudson Investment Group Limited; itself then a publicly listed company. Hudson Corporate had its registered office at the same location as Hudson Resources. As I have said, Mr Tan was one of its directors. Mr Rocket and Mr Choy were company secretary and chief financial officer.
[8]
Mr Tan and his family
Mr Tan is a party to almost all of the communications in these proceedings.
In 2014, he was the managing director of Raffles Capital, which also had its registered office at Level 2, Hudson House. As the corporate chart to which I have referred shows, Raffles Capital had a shareholding in Hudson Resources and Hudson Investment Group (which in turn was the parent company of Hudson Corporate).
As the events that I describe in detail below show, it is evident that Mr Tan exercised practical control over both Hudson Resources and Hudson Corporate.
Hudson Resources did not call Mr Tan to give evidence. He is available. He lives in Sydney. No explanation was offered for his absence. As I have mentioned, he is a current director of Hudson Resources. I assume his evidence would not assist Hudson Resources. [3]
[9]
AceA and Mr Juay
As I have said, AceA is a company registered in Singapore.
Mr Juay was not an officer of AceA but was involved in the critical communications, which I describe below, on 27 and 30 June 2014.
He described his role as "facilitating" the transactions on behalf of Mr Aw.
Mr Juay was in Singapore for the whole of the relevant period.
All of the persons with whom Mr Juay communicated, including Mr Tan and Mr Kinstlinger, were in Sydney.
In June 2014 Singapore time was two hours behind Sydney time. To avoid confusion between the time zones, I will refer only to Sydney time.
[10]
The events leading to 27 June 2014
On 31 January 2014, Mr Tan, writing as chief executive officer of Raffles Capital, and on Raffles Capital letterhead, sent to Mr Aw a document headed "Letter of Undertaking" which read:
"We hereby undertake to do the following: -
1. Procure Hudson Resources Limited to offer 31,800,000 shares in Tiaro Coal Limited at A$0.135 per share for A$4,293,000 to you and/or your nominees and/or potential investors to be introduced by you.
2. Procure the acquisition of 40,000,000 Issue Shares and 40,000,000 Issue Options in Gossan Hill Gold Limited from AceA Resources Pte. Ltd. at A$0.05 per share for A$2,000,000 (no additional consideration is payable for the Issue Options).
3. Procure the acquisition of your shareholding interest in the following companies:
(a) 200,000 shares in Raffles Capital Limited at A$0.50 per share for A$100,000
(b) 3,000,000 shares in Hudson Resources Limited at A$0.20 per share for A$600,000
(c) 1,500,000 shares in Sovereign Gold Company Limited at A$0.20 for A$300,000
(d) 250,000 shares in Precious Metal Resources Limited at A$0.20 for A$50,000.
The above undertaking is valid for 6 months from the date of this letter and we hereby grant you an option to be exercisable within this 6-month period to require that we fulfil the above undertakings and complete the above transactions concurrently."
Mr Kinstlinger sent this letter to Mr Aw by email on 31 January 2014. Mr Kinstlinger agreed that he drafted the letter.
This letter demonstrates the practical control that Mr Tan exercised over Hudson Resources and Hudson Corporate. Raffles Capital was, according to this letter, in a position to procure that Hudson Resources sell the shares referred to in paragraph 1 of the letter and acquire the shares referred to in paragraph 2 of the letter; and also to procure (ultimately by Hudson Corporate) the acquisition of the shares referred to in paragraph 3.
As later emails show, Mr Tan kept the directors of Hudson Resources informed of what he proposed would happen to fulfil the undertaking given in this letter. The directors followed Mr Tan's direction without question.
On 7 June 2014 Mr Juay emailed Mr Tan attaching drafts of the First SPA and the Second SPA. The drafts included the share sale prices that appeared in final agreements. [4]
Mr Tan replied on 8 June 2014:
"Both agreements are ok, Bernard.
We plan to sign the agreements on Tuesday 10 June and forward you the transfer forms."
[11]
The events of 27 June 2014
At 7.54pm Mr Juay sent Mr Tan copies of the First SPA executed by Mr Aw as director of AceA in the presence of another director of AceA, Mr Su Jun Ming, and a copy of the Second SPA executed by Mr Aw personally in the presence of Mr Juay.
This executed copy of the First SPA contained cl 3.1 in the form I have set out at [29] above.
Mr Tan replied a minute later:
"Noted thanks Bernard."
Mr Tan then forwarded Mr Juay's email and the executed copies of the First SPA and the Second SPA to the directors of Hudson Resources as well as to Mr Kinstlinger and Mr Choy.
At 8.13pm Mr Juay sent Mr Kinstlinger (copied to Mr Tan) a copy of an announcement made by ICP Ltd to the Singapore Stock Exchange.
That document announced the entry by AceA on 27 June 2014 into the First SPA and stated, amongst other things:
"The consideration for the Share Acquisition is A$3,051,000 ("Share Acquisition Consideration"), and the consideration for the Share Sale is A$2,000,000 ("Share Sale Consideration"). Under the terms of the SPA, the Share Sale Consideration will be set off against the Share Acquisition Consideration, and that consideration of A$1,051,000 will be satisfied in cash."
[12]
The 9pm conversation between Mr Juay and Mr Tan
Mr Juay said that at around 9pm [5] he had a conversation with Mr Tan which led to the critical change in the wording of the First SPA and to the Payment Instruction.
In his affidavit, Mr Juay said that the discussion was in words to this effect:
"[Mr Juay]: 'To ease the administration required for the two transactions, which may involve the transferring of funds from Singapore to Australia and vice versa which incurs transaction fees, a new clause 3.1(c) could be included in the sale and purchase agreement between AceA and Hudson Resources, in place of clauses 3.1(b)(iii) and (iv) in the agreement sent to you earlier at 5.54pm, requiring the payment of AUD$1,051,000 from AceA to be made into an account with the Singaporean law firm KhattarWong, and that Hudson Resources could then direct KhattarWong to pay those funds to Mr Aw in accordance with the sale and purchase agreement between Mr Aw and Hudson Corporate.'
[Mr Tan]: 'I understand the rationale and I agree to that change.'
[Mr Juay]: 'I will send through an amended sale and purchase agreement and a draft payment instruction letter.'"
There is a dispute about whether this conversation occurred at all and, if it did, whether it was in the form to which Mr Juay deposed.
For the reasons I set out below [6] , I am satisfied a conversation to this effect did occur. Before turning to that question, I will set out the events occurring on 27 June 2014 immediately after the conversation.
[13]
Events immediately after the conversation between Mr Juay and Mr Tan
In cross-examination, Mr Juay said that, immediately after his conversation with Mr Tan, he spoke to Mr Aw. He said the conversation was very short and that after he explained to Mr Aw what he had proposed to Mr Tan, Mr Aw said words to the effect:
"No problem. Go ahead."
Mr Juay said that he then spoke to a solicitor at KhattarWong, Mr Winston Seow and that shortly after that conversation Mr Seow produced the revised wording to cl 3.1 of the First SPA to which I have referred at [31] above. Metadata in relation to Microsoft Word version of the First SPA shows it was amended at 9.03pm. [7]
At 9.27pm, Mr Juay sent Mr Tan an email:
"Please ignore earlier attachments and use the attached SPAs instead."
The attached copy was the Amended First SPA, with the revised wording to cl 3.1, and including the execution page signed by Mr Amzalak and Mr Rockett on 18 June 2014 [8] . Counsel referred to this as the "recycled" execution page.
Mr Juay understood, until part-way through his cross-examination, that he had also "recycled" the execution page earlier signed by Mr Aw and Mr Su. [9] However, in cross-examination Mr Juay accepted that slight differences between the execution page he forwarded under cover of his 9.27pm 27 June 2014 email and the execution page earlier signed by Mr Aw and Mr Su showed that he must have arranged for Mr Aw and Mr Su to re-execute the document on 27 June 2014.
A minute later, at 9.28pm, Mr Tan replied:
"Okay thanks".
A minute later, at 9.29pm Mr Tan forwarded a copy of Mr Juay's 9.27pm email, and the attached copy of the Amended First SPA to the directors of Hudson Resources as well as to Mr Kinstlinger and Mr Amzalak.
Nine minutes later, at 9.38pm, Mr Juay sent an email to Mr Tan:
"Please see attached payment instruction to be signed by Hudson Resources Limited".
Attached was a draft of the Payment Instruction to which I have referred. [10] It read in full:
"[Hudson Resources Ltd letterhead]
KHATTARWONG LLP
80 Raffles Place
#25-01 UOB Plaza 1
Singapore 048624
Dear Sirs
IRREVOCABLE PAYMENT INSTRUCTIONS IN RELATION TO THE SALE & PURCHASE AGREEMENT DATED 27 JUNE 2014 BETWEEN ACEA RESOURCES PTE. LTD. AND HUDSON RESOURCES LIMITED ("AGREEMENT")
We hereby irrevocably instruct you to pay the sum of A$1,050,000 payable by you to us in accordance with Clauses 2.3 and 3.1(c) of the Agreement to Mr Aw Cheok Huat.
Unless and until you receive a joint written notice from Mr Aw Cheok Huat and us to the contrary, you shall effect payment of the [sic] in accordance with this irrevocable payment instruction. For the avoidance of doubt, this irrevocable payment instruction shall not be revoked, terminated, changed, substituted or amended except by a joint written notice from Mr Aw Cheok Huat and us.
Yours faithfully
Hudson Resources Limited
[name]
Managing Director"
[14]
The conversation
I am affirmatively persuaded that a conversation did occur between Mr Juay and Mr Tan. That conversation was to the effect that Mr Juay suggested, and Mr Tan agreed, that for administrative convenience AceA should pay the $1,051,000 due to Hudson Resources under the First SPA to KhattarWong's trust account, with a view that $1,050,000 of that sum (that is, all but $1,000) would be paid to Mr Aw in satisfaction of his entitlements under the Second SPA.
The bulk of Mr Condon's cross-examination of Mr Juay, which occupies some 80 pages of the transcript, was directed to this conversation.
Mr Juay gave his evidence on Microsoft Teams from Singapore.
He gave his evidence calmly and clearly. He gave me the strong impression that he was doing his best to tell me the truth about his recollection of his conversation with Mr Tan.
Mr Condon submitted that Mr Juay was an unimpressive witness. I do not agree. I found him to be an impressive witness.
In the account of his conversation in his affidavit, Mr Juay said that he had made the suggestion, ultimately reflected in the Payment Instruction, "to ease the administration required for the two transactions".
Early in his cross-examination, Mr Condon asked Mr Juay to recount the conversation. This exchange followed:
"Q. Well, try and use the words you actually said to Mr Tan. Tell his Honour your best recollection of what you said?
A. Well, with Mr Tan and me not even had gone to the details of - I mean, just say that for the purpose of easing the payment process for the two SPAs. I believe that - that would have been the gist of my conversation with Mr Tan.
Q. I'm asking you to state as fully as you can your recollection of what you said to Mr Tan on this occasion on June 27, 2014? Does your memory extend to anything else you said to Mr Tan, apart from what you just told his Honour?
A. No.
Q. And--
A. Sorry, it was a very short call.
Q. You simply said - you call him up and you said for ease of administration, you are proposing a change; is that right?
A. I sought his agreement to the change.
Q. What did you say to convey that request to him?
A. I asked him if he is agreeable.
Q. What did he say in response?
A. Well, he said that he understands the rationale doing so and he agrees to it.
Q. What did you say in response to him?
A. Well, I told him that I will send across he revised SPA as well as a payment instruction letter after our phone call.
HIS HONOUR
Q. You mentioned a moment ago the words "payment mechanism". Do you recall saying anything to Mr Tan about what changes of that payment mechanism you were proposing?
A. Yes, yes, I did.
Q. What did you say?
A. Your Honour, I told Mr Tan that, whether he's agreeable for AceA to remit the purchase consideration to the trust account of KhattarWong.
CONDON
Q. Apart from that, you don't recall anything else said in that conversation between you and Mr Tan; is that right?
A. Yes.
Q. You fully exhausted your recollection of what was said; is that right?
A. Yes."
[15]
Events after 27 June 2014
The following day, Saturday 28 June 2014, Mr Tan replied to Mr Juay's email attaching the draft payment instruction:
"Noted, thanks".
On Monday 30 June 2014 Mr Juay followed up on his 9.38pm 27 June 2014 email to Mr Tan concerning the payment instructions:
"Can Hudson sign and email scanned copy?"
Mr Tan immediately sent an email to Mr Kinstlinger, copied to Mr Juay:
"Pl attend".
In his affidavit, Mr Kinstlinger said:
"I understood that this email was requesting me to review the enclosed Payment Instruction…against the [First] SPA and the Raffles Capital Undertaking [of 31 January 2014] [20] and, if consistent, to assist to coordinate its execution by Hudson Resources, as sought by Bernard Juay."
Mr Kinstlinger continued:
"I do not recall speaking to anyone about the contents of the draft Payment Instruction. I understood my role in this context was to review the draft Payment Instructions against the Raffles Capital Undertaking. On reading [Mr Juay's email referred to at [150] above] I concluded that Hudson Resources had agreed to the terms of the draft Payment Instruction."
Within three minutes of receiving Mr Tan's email set out at [151] Mr Kinstlinger replied to Mr Tan, copied to Mr Juay :
"We're doing it now.
We need to correct reference to cl 3.1(c) (no such clause).
We will amend to 31.(b), otherwise fine."
Mr Kinstlinger intended to refer to clause 3.1(b) of the First SPA, rather than to "31.(b)".
Mr Kinstlinger's statement that "we need to correct" the reference to cl 3.1(c) suggests that he had not then appreciated that cl 3.1 (c) had been added to the First SPA.
But the true positon was immediately made clear to him.
Thus, Mr Juay replied three minutes later:
"Para 3.1(c) is a newly inserted clause by our lawyer. Please see attached final SPA."
Twenty four minutes later Mr Kinstlinger replied to Mr Juay:
"Thanks Bernard.
I didn't check for changes after Hudson had signed the SPA.
Also, is there a reason for the amount to be $1,000 less than the SPA?"
In his affidavit, Mr Kinstlinger explained this email as follows:
"I saw that the 27 June [First] SPA contained a clause 3.1(c). I accepted what Bernard Juay said in his email. As I have said, I saw that the revised [First] SPA had apparently been executed by both Hudson Resources and AceA resources. I assumed that Hudson Resources had executed the 27 June [First] SPA some time after I had sent Bernard Juay the 18 June [First] SPA. I did not compare the execution pages. I did not speak to Julian Rockett or Benny Amzalak, or anyone else about this. It did not occur to me that AceA Resources and Bernard Juay may have re-used the Hudson Resources execution page from the 18 June [First] SPA, or that Hudson Resources had not in fact approved the 27 June [First] SPA or the payment of A$1,050,000 to Mick Aw."
[16]
Did Mr Juay and/or AceA engage in misleading or deceptive conduct?
[17]
Principles
There was no dispute before me as to the relevant principles.
Whether conduct is misleading or deceptive is a question of fact, to be determined objectively by reference to the alleged conduct in the light of the surrounding circumstances. [36]
The relevant conduct must be capable of inducing error. [37]
The conduct must convey a meaning inconsistent with the true position and thereby lead to error. [38]
It is necessary to construe the effect of the conduct against the status, sophistication and knowledge of the person to whom the conduct is directed. [39]
Finally, the conduct must be viewed as a whole. [40]
[18]
Generally
Applying these general principles, the conduct of Mr Juay and AceA must, as Mr Hughes submitted, be analysed against the background that everyone involved in these transactions with Hudson Resources was an experienced commercial player with overlapping roles in numerous ASX listed companies.
Further, the transactions involved a significant amount of money and, again, as Mr Hughes submitted, one would expect that commercial people would take care in consideration and execution of documents.
[19]
Was Mr Juay's or AceA's conduct misleading or deceptive or likely to mislead or deceive?
As I have set out above, Hudson Resources has made precise allegations as to the conduct that it alleges to be misleading or deceptive. To repeat, that conduct is the:
1. sending by Mr Juay of his 9.27pm 27 June 2014 email to Mr Tan attaching the Amended First SPA with clause 3.1(c) added to it;
2. failure of Mr Juay, Mr Aw or AceA to inform Hudson Resources that the First SPA had been modified by the addition of clause 3.1(c); and
3. sending of the draft Payment Instruction by Mr Juay to Mr Tan under cover of his 9.38pm 27 June 2014 email.
The reason this conduct is alleged to be misleading or deceptive is identified in Hudson Resources' Amended Statement of Claim to be because:
1. the form of the First SPA attached to Mr Juay's 9.27pm email "did not reflect the terms of the parties' agreement";
2. Hudson Resources had a reasonable expectation of being told of any material alteration to the First SPA or of how the funds payable under the First SPA to Hudson Resources were to be paid;
3. the draft Payment Instruction was proffered by Mr Juay, Mr Aw and AceA on the basis that it accorded with the parties' agreement, when that was not the case; and
4. the Payment Instruction was not issued in conformity with clause 3.1(b)(iii) of the original draft of the First SPA.
As I have said [41] , it follows from my acceptance of Mr Juay's evidence about his conversation with Mr Tan that Hudson Resources' case he, and thus AceA and Mr Aw, engaged in misleading or deceptive conduct is not established.
In any event, Mr Juay's 9.27pm 27 June 2014 email stated "please ignore earlier attachments and use the attached SPAs instead". That made clear that the form of the First SPA attached to that email, the Amended First SPA, was different from the form of the First SPA signed by Mr Amzalak and Mr Rockett on 18 June 2014.
The fact that a "new" clause 3.1(c) had been incorporated into the First SPA was also made clear to Mr Kinstlinger by Mr Juay's 30 June 2014 email. [42]
Mr Kinstlinger's reply [43] saying that "I didn't check for changes after Hudson had signed the SPA" shows that Mr Kinstlinger understood that the insertion of clause 3.1(c) was something that had happened after Mr Amzalak and Mr Rockett had signed the First SPA on behalf of Hudson Resources on 18 June 2014.
[20]
Was Hudson Resources misled by any conduct of Mr Juay or AceA?
For the same reasons, Hudson Resources was not misled by any of the conduct complained of.
Hudson Resources knew of the true position through Mr Tan, Mr Kinstlinger and Mr Amzalak.
In particular, Mr Tan was acting as Hudson Resources' agent throughout and was the principal actor on Hudson Resources' behalf.
He knew and understood that the effect of what Mr Juay proposed on 27 June 2014 was that, instead of receiving $1,050,000 on closing of the First SPA, Hudson Resources would direct that sum to be paid to Mr Aw, in satisfaction of Mr Aw's entitlements from Hudson Corporate under the Second SPA.
Similarly, Mr Kinstlinger knew from his email exchange with Mr Juay on 30 June 2014 of the true position.
As to Mr Amzalak, the only director of Hudson Resources to give evidence in these proceedings, he signed what was put in front of him because, as Mr Condon accepted, "he didn't even care" [46] .
There is also objective evidence which can only be consistent with Hudson Resources' actually knowing the true position.
First, there are the loan accounts created by Mr Choy, showing a debt by Hudson Corporate to Hudson Resources in the sum of $1,050,000 and the subsequent repayment by Hudson Corporate to Hudson Resources of that debt. [47]
Second, there is the ratification by the board of Hudson Resources of the First SPA. [48]
Third, there are the statements by Hudson Resources' then Singapore solicitors, Allen & Gledhill [49] which are contradictory of the case that Hudson Resources has put before me.
[21]
Did Hudson Resources suffer any loss "because" of Mr Juay's, Mr Aw's or AceA's conduct?
It follows from these conclusions that Hudson Resources has not suffered any loss "because" of any conduct by Mr Juay, Mr Aw or AceA. [50]
In any event, Hudson Resources has not suffered any loss at all because, as a result of the transactions with which these proceedings are concerned, it acquired a debt from Hudson Corporate, which has now been paid off.
As I have said, the instruction that Mr Beasley gave Mr Choy on 14 June 2018 to reverse the credit in favour of AceA Holdings did not, on the evidence, have the effect of reversing the relevant entries in the Hudson Resources/Hudson Corporate Loan Accounts.
[22]
Did Hudson Resources execute the Payment Instruction under a mistake?
Hudson Resources pleads that:
"In the mistaken belief that the [Payment] Instruction was validly issued in accordance with the [First] SPA and authorised by [Hudson Resources], the Plaintiff:
(a) executed the [Payment] Instruction, and
(b) on 30 June 2014, sent the executed [Payment] Instruction to Mr Juay."
Hudson Resources has not shown that it executed the Payment Instruction as a result of any mistake.
Mr Amzalak was simply giving effect to Mr Tan's instruction to Mr Kinstlinger to "pl attend" to the execution of the Payment Instruction. It was Mr Tan who made the decision for Hudson Resources to do this.
As Mr Hughes submitted, that is consistent with Mr Tan's admitted role as an agent for Hudson Resources and his position as a director of Hudson Corporate.
It is clear from the Raffles Capital letter that it was Mr Tan who had undertaken, on behalf of Raffles Capital, to procure the transactions which became the subject of the First and Second SPAs. It was Mr Tan who arranged those transactions and directed execution of the documents. It was Mr Tan who directed steps to implement the transactions. It is therefore the knowledge of Mr Tan that is relevant to the question of whether the Payment Instruction was executed under a mistake. Mr Tan was not mistaken. He was aware of, and agreed to the changes to the First SPA in the conversation with Mr Juay on 27 June 2014. It was Mr Tan who approved the form of the draft Payment Instruction and, on receipt of it, simply forwarded it to Mr Kinstlinger for execution.
[23]
Did Mr Aw change his position based on the payment?
In any event, Mr Aw has changed his position based upon the payment such that it would be unconscionable to require him to now repay it. After he received the payment he transferred his shares to Hudson Corporate under the Second SPA.
Mr Aw has acted to his detriment on the faith of the receipt. [51]
[24]
Conclusion
For all these reasons, Hudson Resources' case fails at every level.
The Amended Statement of Claim should be dismissed.
I will hear the parties as to costs.
[25]
Endnotes
"Australian Consumer Law".
For convenience, and without intending any disrespect to Ms Thrift, I will from here refer only to Mr Hughes when referring to the submissions made on behalf of AceA, Mr Juay and Mr Aw.
Jones v Dunkel (1959) 101 CLR 298.
See [2] and [7] above.
7pm Singapore time.
See [103] to [145]
7.03pm Singapore time.
See [78] above.
See [84] above.
See [33]-[35] above.
Singapore time; around 9pm Sydney time.
And as with Mr Hughes and Ms Thrift, I will henceforth, without intending any disrespect to Mr Bender, refer only to Mr Condon when referring to the submissions made on behalf of Hudson.
Of a total of 28; a quarter.
See [89] above.
Eg Neumann Contractors v Wyong Shire Council [2010] NSWSC 614 at [233] (McDougall J); and Hintze v Tsering [2018] NSWSC 1190 at [58] (Sackar J).
Eg Kuhl v Zurich Financial Services Australia Limited (2011) 243 CLR 361; [2011] HCA 11 at [64] (Heydon, Crennan and Bell JJ); Oran Park Motorsport Pty Ltd v Fleissig [2002] NSWCA 371 at [66] (Hodgson JA); Flack v Chairperson National Crime Authority (1997) 80 FCR 137 at [148]-[149] (Hill J); Sagacious Legal Pty Ltd v Wesfarmers General Insurance Limited [2011] FCAFC 53 at [79] (Besanko, Perram and Katzmann JJ); Wollongong Coal Limited v Gujarat NRE Properties Pty Ltd [2020] NSWSC 254 at [67]-[68] (Rein J).
At T259.16.
Sagacious v Wesfarmers at [79].
Ibid.
See [57] above.
T174.35.
T7.25 on Day 5.
Hudson Corporate Ltd.
Raffles Capital Ltd.
Hudson Resources Ltd.
Sovereign Gold Company Ltd.
Precious Metal Resources Ltd.
Referred to at [89] above.
His daughter and a director of Hudson Resources.
Tiaro Coal.
Mr Mick Aw.
Hudson Resources.
Hudson Resources.
See [89] above.
[26]
Amendments
03 February 2021 - Small correction to title of matter: "Pty Ltd" changed to "Limited"
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 03 February 2021
Hudson Resources' case is that it was unaware of this change, and was misled, and that this resulted in it executing the Payment Instruction. The circumstances in which the Payment Instruction came into being are at the heart of the dispute in the proceedings.
The Payment Instruction was from Hudson Resources to KhattarWong. It read:
"We irrevocably instruct you to pay the sum of $1,050,000 payable by you to us in accordance with clause 2.3 and 3.1(c) of the [First SPA] to [Mr Aw]."
The Payment Instruction referred to "$1,050,000" payable to Hudson Resources under the First SPA. In fact, as I have set out, $1,051,000 was so payable; a difference of $1,000.
It is common ground that:
1. on settlement of the First SPA, and on the basis of the Payment Instruction, the $1,051,000 due from AceA to Hudson Resources was paid to KhattarWong; and
2. KhattarWong applied $1,050,000 of that sum to Mr Aw in accordance with that instruction.
The application of the $1,050,000 to Mr Aw allowed the Second SPA to complete.
As between Hudson Corporate and Hudson Resources, an inter-company loan of $1,050,000 from Hudson Resources to Hudson Corporate was recorded in the books of each company on or around the time of the transaction. There is controversy about these entries to which I will return.
After KhattarWong made the payment to Mr Aw, $1,000 remained in its trust account. That sum was paid out to Hudson Resources at its request in January 2015.
Mr Hughes and Ms Thrift [2] summarised, diagrammatically, what happened as follows:
Before turning to events leading up to 27 June 2014, and critical events thereafter, I will turn to the key entities and individuals.
A short time later, also on 8 June 2014, Mr Tan forwarded Mr Juay's 7 June 2014 email, and the attached draft agreements, to each of the directors of Hudson Resources as well as to Mr Rockett, Mr Kinstlinger and Mr Choy stating:
"We will finalise agreement on the sale of [Tiaro Coal] and the purchase of Mount Adrah on Tuesday [10 June 2014]."
Mr Tan was referring to the two components of the transaction contemplated by the First SPA.
Although, as I have said, Mr Tan was not a director of Hudson Resources at this time, his language is directive and, as Mr Hughes submitted, is not language that suggests that he had any doubt that the agreements would be approved.
The next day, 9 June 2014, Mr Tan sent an email to Mr Juay, with a copy to Mr Aw:
"Please send the Agreements for signatures."
On the same day Mr Tan sent an email to the directors of Hudson Resources, as well as Mr Choy, Mr Kinstlinger and Mr Rockett which said:
"Julian [Rockett]/Henry [Kinstlinger]
Please prepare [Hudson Resources'] board resolution re: Sales of [Tiaro Coal] shares to be signed by the Chairman/director and Co Secretary."
Again, Mr Tan is using the language of direction and, evidently, was not expecting any demur from either Mr Rockett or Mr Kinstlinger.
Although in his email of 8 June 2014, Mr Tan has foreshadowed finalisation of the First SPA on 10 June 2014, there was a delay. Evidently this was because of the need for clearance of the proposed agreements from the Singapore Stock Exchange; no doubt because AceA's parent ICP Ltd was listed on that exchange.
On 10 June 2014 Mr Choy sent an email to Mr Rockett and Mr Kinstlinger:
"Once available, please email me fully signed agreements for record and working."
On 17 June 2014 Mr Kinstlinger sent an email to Mr Juay:
"Following up on your advice to Vincent [Tan] that the agreements should be cleared by [the Singapore Stock Exchange], can you finalise the attached agreements and I will arrange execution at our end."
Mr Juay replied a short time later:
"The agreements are finalised. We are getting concurrence from [the Singapore Stock Exchange] that the proposed disposal is only a disclosable transaction."
Mr Kinstlinger replied:
"Thanks. We are happy with the agreements. I was referring to the items that need to be completed, i.e. Closing date."
On the evening of 17 June 2014 Mr Juay sent an email to Mr Kinstlinger, with a copy to Mr Tan:
"Please see attached execution copies of the agreements."
Within minutes, Mr Tan forwarded a copy of that email to the directors of Hudson Resources as well as Mr Choy and Mr Rockett with the note "FYI".
The following day, 18 June 2014, Mr Kinstlinger sent Mr Rockett an instruction:
"Please finalise Board Minute by Hudson [Resources] for the [First SPA] sale and have both agreements executed this morning."
Later on 18 June 2014, an employee of Hudson Resources, Mr Tharun Kuppanda, sent to Mr Rockett a Hudson Resources circular resolution, signed by the directors, Mr Meers and Mr Amzalak, which stated:
"It is resolved that the Company enter into the Share Purchase Agreement with AceA Resources Pte Ltd, in the form attached and tabled to this resolution; and the Secretary is directed to advise the regulatory authorities of the change in the company's interests pursuant to this resolution."
On 18 June 2014 Mr Amzalak, as a director of Hudson Resources, executed the First SPA in the presence of Mr Rockett as company secretary.
In his affidavit, Mr Amzalak explained how it was that he executed the document by reference to a conversation he said he had with Mr Meers on 18 June 2014 as follows:
"[Mr Meers]: 'Benny, the sale of the Hudson Resources' shares in Tiaro to AceA Resources is a good deal for Tiaro, as it opens up funding and strategic opportunities. Julian [Rockett] is preparing the Hudson Resources directors' circular resolution for the authorisation to enter into the Sale and Purchase Agreement. As I am the Executive Chairman of Tiaro, you will need to sign the Sale and Purchase Agreement as a director of Hudson Resources to avoid the perceived conflict with respect to Hudson Resources and Tiaro.'
[Mr Amzalak]: 'Okay I understand.'
[Mr Meers]: 'It is a good deal for both Hudson Resources and Tiaro.'"
Later on 18 June 2014 Mr Rockett sent Mr Kinstlinger an email with the heading "Agreements for Mick Aw" reading:
"Henry, see executed agreements attached."
Also on 18 June 2014, Mr Tan signed the Second SPA as director of Hudson Corporate and Mr Rockett signed as Mr Tan's witness.
Later on 18 June 2014, Mr Kinstlinger sent the executed First SPA and Second SPA to Mr Juay.
There matters rested, until 27 June 2014.
In that account, Mr Juay made no reference to having said to Mr Tan anything about Hudson Resources giving KhattarWong a direction to pay funds to Mr Aw, although that is precisely what the Payment Instruction states.
Mr Juay also did not refer to having spoken to Mr Tan about new clause numbers to be included in the First SPA or having nominated the precise time at which his earlier email had been sent. Mr Juay accepted that he "may or may not" have said those words. I understood him to mean that he accepted that he probably did not actually speak to Mr Tan in those terms. He could not have done so because he did not then know what those paragraph numbers would be. Mr Juay thus in effect agreed that his affidavit account of the conversation with Mr Tan does not represent his actual recollection of the detail of the conversation. However, Mr Juay was adamant as to his actual recollection of the substance of what was said which is, after all, reflected in the terms of the draft of the Payment Instruction that he sent Mr Tan immediately after their conversation. Overall, I do not see the concessions made by Mr Juay as a reason to doubt the substance of his evidence.
Overall, Mr Juay was very clear about the gist of what he had said to Mr Tan, as is revealed by this exchange:
"Q. Well, on what basis did you possibly think that those words had been said when you composed this affidavit?
A. Because I specifically told Mr Tan when I spoke to him on the phone that - can we include a clause in the SPA and the rationale, the purpose of that clause is solely to facilitate the payment administration and the clause would include a payment to the trust account of KhattarWong. I said that to Mr Tan and Mr Tan agrees to that arrangement."
Mr Juay accepted that he had earlier opportunities to make the suggestion that he said was the subject of his conversation with Mr Tan. That caused me to have this exchange with Mr Juay:
"HIS HONOUR:
Q. Can you recall what caused you to think about that matter? In other words, [at around 7] [11] o'clock [on] the Friday, what caused you to think about adopting what you've called the facilitation … process to ease matters? Can you recall how that came to your mind?
A. Well, your Honour, I think - I think it just - it just came - it's just an instinct that that I was - I was - I was just - I was just trying to look at what are the items that needs to be accomplished. So, there were - there were transfer forms that needs to be sent and signed by the respective parties. There were payments to be made under the two SPAs and - and this - and on that basis, I didn't - I didn't sort of thought why, in view that both SPAs, the consideration, for both SPAs are almost the same, short $1,000, whether there could be a better way to effect the payments under the respective SPAs.
Q. Is that was your idea, was it? It came--
A. It was - it was my - it was my idea, your Honour.
Q. It wasn't because of anything anyone else suggested to you?
A. No, your Honour."
In the closing submissions, Mr Condon and Mr Bender, [12] devoted seven pages [13] to outlining 12 matters said to be inconsistent with a finding that the conversation took place.
First, Mr Condon pointed to the difference between the account given by Mr Juay in cross-examination of the conversation and that set forth in his affidavit. As I have set out, there are some differences. I accept this is a matter to be taken into account. However, I think that Mr Hughes was correct to submit that Mr Juay's evidence as to important matters did not change.
I do not accept Mr Condon's submission that Mr Juay's proposal was so vague that Mr Tan would not agree to it. What Mr Juay was proposing was clear, and was in substance reflected in the draft Payment Instruction; which is also clear.
Next, Mr Condon submitted that Mr Juay's account of his conversation would render misleading the announcement made by ICP Ltd to the Singapore Stock Exchange that an amount payable to Hudson Resources under the First SPA had been "satisfied in cash". [14] This is not a matter that Mr Condon suggested to Mr Juay occurred to Mr Juay at the time. In any event, when Mr Juay's attention was drawn to it in cross-examination he said he thought "it was satisfied in cash".
Next, Mr Condon submitted that, even if the conversation occurred, it "would have given no reason for AceA or Mr Juay to believe that the changes to the [First] SPA had been approved by the board of Hudson Resources". In my opinion this is beside the point.
Mr Juay said that he understood that Mr Tan was the authorised representative of Hudson Resources for the purposes of the transaction. That is Hudson Resources' pleaded position in this case and, as I have set out, was obviously the fact. I have no hesitation in accepting Mr Juay's evidence that that is how he understood the position.
In that regard, Mr Juay gave this evidence:
"Q. You understood from your basic knowledge of how companies operated, that if the SPAs were to be amended, the boards of the two companies would have to so resolve. That's the case, isn't it?
A. Yes, and that's the reason why I spoke to Mr Tan and I spoke to Mr Aw, to get their concurrence on the change.
Q. But you told his Honour earlier today that you understood that Mr Aw did not control the board of Hudson Resources, correct?
A. Yes, but he was the representative. Was acting on this particular transaction, and so was Mr Tan.
Q. And you understood that Mr Aw did not control the board of AceA, didn't you?
A. Yes.
Q. Your evidence is that after you had the telephone conversation with Mr Tan at 7pm Singapore time, you simply attached to the amended SPA the execution pages of the earlier SPA, correct?
A. That's after I received approval from Mr Tan and Mr Aw.
Q. You had no reason to think that the boards of either of those companies had actually approved the change, did you?
A. I leave it to Mr Aw and Mr Tan, to obtain whatever is necessary to effect the change."
In my opinion it was reasonable of Mr Juay to adopt this position. I accept that he had no reason to doubt that formal approval would, in due course, occur.
Next Mr Condon submitted that, on Mr Juay's account of the conversation, he and Mr Aw were content that Mr Juay would act on AceA's behalf unilaterally and without board approval from AceA or ICP.
But this was not Mr Juay's position. As I have set out above, Mr Juay understood that Mr Aw and Mr Tan had authority from ICP/AceA and from Hudson Resources and left it to them to obtain whatever formal approvals or authorisations may be necessary.
Next Mr Condon submitted that it was unlikely that "the idea of utilising a set-off at completion suddenly dawned on Mr Juay" on the evening of 27 June. I see no reason to doubt Mr Juay's evidence about this matter.
Next Mr Condon submitted that, as at the evening of 27 June 2014, it was not anticipated that there would be a simultaneous completion of the First SPA and the Second SPA. Mr Condon pointed to the different closing dates referred to in each document (30 June 2014 for the Second SPA but 4 July 2014 for the First SPA).
Mr Juay's proposal does appear to contemplate simultaneous settlement. I see no reason to doubt that was what he thought would happen.
Next, Mr Condon queried what transaction costs might be saved by reason of Mr Juay's proposal. I see nothing improbable about Mr Juay's stated view that his proposal would be administratively simpler and avoid fees. The fact that it may not have achieved significant savings is a matter of little weight, in my opinion.
Next Mr Condon pointed to the fact that the result that Mr Juay said he was seeking to achieve could have been achieved by making a nomination under cl 3.1(b) of the First SPA. That may be so but, evidently, it was not something Mr Juay thought of at the time. Mr Juay immediately accepted, when it was put to him, that nomination was another possible solution.
Next Mr Condon submitted that, having made a suggestion which had the result of KhattarWong including cl 3.1(c) in the First SPA, "it would be odd for Mr Juay to recycle the execution pages for the original SPA rather than being up front about the change when he sent the purported SPA to Mr Tan and asking that Hudson Resources execute the document". Mr Condon was referring to the fact that, as I have set out above, Mr Juay reused or "recycled" the execution page signed by Mr Amzalak and Mr Rockett on 18 June 2014. I do not see how that casts any light on whether the conversation took place as Mr Juay stated. In any event, the submission appears to proceed upon the assumption that the conversation did occur, and thus does not assist with the anterior question of whether the conversation occurred.
Next, Mr Condon referred to cl 12 of the First SPA which provided that it can only be varied in writing. However, Mr Condon did not put to Mr Juay that he was aware of the clause or that it affected his thinking. It is unlikely that it did.
Next Mr Condon referred to Mr Juay's response to a letter Hudson Resources sent Mr Juay almost four years later, on 17 May 2018.
That letter, which was signed by Mr Alan Beasley, then a director of Hudson Resources, referred to Mr Juay's 7.54pm and 9.27pm emails to Mr Tan and continued:
"The [Amended First SPA attached by Mr Juay to his 9.27pm 27 June 2014 email] was not signed by Hudson Resources' director, Mr Benjamin Amzalak or Company Secretary, Mr Julian Rockett. Unlike the [version of the First SPA executed by Mr Amzalak and Mr Rockett on 18 June 2014] none of the pages of the [Amended First SPA sent by Mr Juay with his 9.27pm 27 June 2014 email] were initialled by Messrs Amzalak or Rockett. Again, the Original Hudson Execution page 10 has been inserted without Hudson Resources' knowledge or authority.
In my review of this matter as outlined above, the re-use of the Original Hudson Execution Page 10 without Hudson Resources' knowledge or authority, was unauthorised, and was apparently fraudulent."
Mr Beasley requested an explanation. Mr Juay responded on 23 May 2018:
"I am surprised by these spurious allegations and I decline to be subject to such unwarranted questioning by Hudson Resources. You should not be writing to me in this manner and should not have copied the letter to others too…"
Mr Condon referred to authorities stating that, in some circumstances, a failure to respond to an accusation may amount to an admission that the accusation is well made. [15]
Those authorities are not to the point. On no reading of Mr Juay's 23 May 2018 response was he making any admission. On the contrary.
Finally, Mr Condon pointed to the fact that Mr Aw had not been called to corroborate Mr Juay's evidence that he spoke to Mr Aw immediately after his conversation with Mr Tan. However, Mr Aw was not a party to the conversation between Mr Juay and Mr Tan and could not have given any evidence about that matter.
In any event, Mr Condon's submission was somewhat bold in circumstances where Hudson Resources did not call Mr Tan to give his account of the conversation. As I have said, Mr Tan is a current director of Hudson Resources and lives in Sydney.
For those reasons, I do not accept any of the bases advanced by Mr Condon to not accept Mr Juay's account of his conversation with Mr Tan.
In any event, the email exchanges between Mr Juay and Mr Tan following the conversation are consistent with Mr Juay's account of it.
The emails between Mr Juay and Mr Tan are brief. Mr Tan's 9.28pm response "OK thanks" to Mr Juay's 9.27pm email "Please ignore earlier attachments and use the attached SPAs instead" is consistent with Mr Tan understanding the implications of Mr Juay's email and its attachment. The draft Payment Instruction that Mr Juay sent Mr Tan immediately after their conversation is clear and evoked no response from Mr Tan suggesting any surprise or misunderstanding by him.
If the conversation had not occurred, Mr Tan would surely have said something, or made some enquiry of Mr Juay.
And Hudson Resources did not call Mr Tan to dispute Mr Juay's account of the conversation.
Mr Condon submitted that I should not give "undue weight" to this and referred to authorities describing the limits to the inferences that can be drawn when a party without explanation does not call an available and relevant witness. [16]
But here, the failure to call Mr Tan is stark, particularly as Mr Condon put to Mr Juay that the conversation did not take place at all [17] . Mr Tan is, obviously, a person who could "cast light" [18] on whether the conversation took place and, if so, what its terms were. Hudson Resource's failure to call Mr Tan enables me "more confidently" [19] to accept Mr Juay's account of it.
I am satisfied that a conversation took place between Mr Juay and Mr Tan to the effect of Mr Juay's evidence. In particular, I am satisfied that Mr Juay suggested to Mr Tan that the transaction proceed on the basis set out in the draft Payment Instruction that Mr Juay sent Mr Tan immediately after their conversation.
This finding is fatal for Hudson Resources' misleading or deceptive conduct case against Mr Juay, AceA and Mr Aw.
The conduct alleged by Hudson Resources in its Further Amended Statement of Claim to be misleading or deceptive is the:
1. sending by Mr Juay of the 9.27pm 27 June 2014 email to Mr Tan attaching the Amended First SPA;
2. alleged failure of Mr Juay, Mr Aw or AceA to inform Hudson Resources that the First SPA had been modified by the addition of cl 3.1(c); and
3. sending by Mr Juay of the draft Payment Instruction to Mr Tan at 9.38pm on 27 June 2014.
Mr Tan was an authorised agent of Hudson Resources for the purpose of his conversation with Mr Juay and received Mr Juay's 9.27pm and 9.38pm emails in that capacity. Mr Juay told Mr Tan what he proposed was the effect of the amendments to be made to the First SPA. Mr Tan agreed. Mr Tan received the proposed form of the Amended First SPA, including cl 3.1(c) and must have seen its effect and understood its implications. He also saw, and must have understood, the implications of the draft Payment Instruction.
Mr Rockett was copied on this email exchange. He was not called to give evidence, but he must have understood that, contrary to the assumption Mr Kinstlinger said he made, Hudson Resources had not re-executed the First SPA since 18 June 2014. That is because he witnessed Mr Amzalak's signature on 18 June 2014 and must have known he had not done this again.
Mr Kinstlinger continued:
"Accordingly… I responded to Bernard Juay's email… noting that I did not check for changes after Hudson Resources executed the 18 June [First] SPA which I had sent Bernard on 18 June 2014. I also asked why there was a A$1,000 difference. I did not receive any response from Bernard Juay …
If I had known on 30 June 2014, that clause 3.1(c) in the 27 June [First] SPA I had received from Bernard Juay on 30 June 2014, had not been agreed by Hudson Resources, or that Hudson Resources had not authorised Mick Aw to receive the money which was the subject of the Payment Instruction, I would have:
(a) drawn each of those facts to the attention of Peter Meers, a Hudson Resources director, in the first instance; and
(b) not given the Payment Instruction to Julian Rockett, company secretary of Hudson Resources, to arrange the execution of the Payment Instruction by Hudson Resources."
Mr Kinstlinger's evidence proceeds on a false basis, namely that Hudson Resources had not agreed to the inclusion of cl 3.1(c) in the First SPA or to the effect of the Payment Instruction. Hudson Resources, by its authorised agent, Mr Tan, had agreed to both these matters.
And there is no evidence of what would have occurred had Mr Kinstlinger referred the matter to Mr Meers. Mr Meers was not called.
Mr Condon submitted that:
"The Court can safely infer that Mr Meers, had he been made aware that the Payment Instruction and Purported SPA provided for a payment to Mr Aw via KhattarWong's client account that had not been agreed by Hudson Resources, would have directed Mr Kinstlinger not to execute the Payment Instruction or to take any other steps to permit that payment to occur."
I do not accept that submission. It proceeds on the false assumption that changes had not been agreed to by Hudson Resources. In any event, I think the more likely inference is that, had Mr Kinstlinger spoken to Mr Meers about this matter, Mr Meers would have consulted with Mr Tan and been informed of Mr Tan's conversation with Mr Juay and been instructed by Mr Tan to proceed on the basis of the Payment Instruction.
In these circumstances, I did not accept that the result would have been that Mr Kinstlinger would not have passed on the draft Payment Instruction to Mr Rockett.
I will return to this evidence when considering the question of whether any misleading or deceptive conduct by Mr Juay has caused any loss to Hudson Resources.
Mr Kinstlinger arranged for Mr Juay's draft Payment Instruction to be engrossed on Hudson Resources letterhead.
The Payment Instruction was executed by Mr Benjamin Amzalak, a director of Hudson Resources. Mr Amzalak was the only director of Hudson Resources called to give evidence before me.
In his affidavit, Mr Amzalak said that Mr Kuppanda gave him this document. He said:
"I did not prepare this document. I do not recall any discussion with Tharun Kuppanda about the Irrevocable Payment Instruction.
I scanned the Irrevocable Payment Instruction. To the best of my recollection, I understood the document was giving effect to the [First] SPA and I recognised the name KhattarWong LLP from the [First] SPA."
Before me, in chief, Mr Amzalak gave this evidence:
"Q. Can you tell his Honour what you meant by the word "scanned", what you actually did in relation to the irrevocable payment instruction?
A. It's, I had a very quick look over the document. That's, well, the things that stood out to me were the date, the name of who it was going to and the place for my signature."
In his affidavit, Mr Amzalak continued:
"At the time I signed the Irrevocable Payment Instruction I did not note the payee was Mick Aw. If I had noted that I would not have signed the Irrevocable Payment Instruction, unless I had known that the Hudson Resources board had approved the payment to Mick Aw. At the time I was not aware of any such approval and no one from the board had approached me to approve it.
It would have been my expectation at the time that, had Hudson Resources nominated Mick Aw as the recipient of the payment under the SPA, this is a matter that would need board approval and would therefore be notified to me as a director.
Had I noted that the Irrevocable Payment Instruction was to send funds to Mick Aw I would have raised that circumstance with Peter Meers.
On 30 June 2014 at the time I signed the Irrevocable Payment Instruction I was not aware that the signature page on the 18 June SPA had been used by AceA Resources as part of First 27 June SPA or Second 27 June SPA without approval from me or any other Hudson Resources director. If I had believed that to be the case I would not have signed the Irrevocable Payment Instruction. I would have brought the fact to the attention of Peter Meers, and, depending on his response, to the other directors of Hudson Resources. I would not have signed the Irrevocable Payment Instruction unless and until I knew there was a satisfactory explanation for that situation."
I do not accept this evidence.
In my opinion, the true position is that Mr Amzalak's simply signed the Payment Instruction without giving it any serious attention. Mr Amzalak accepted that he did not exercise the necessary level of care that a director of Hudson Resources should exercise when executing this document. [21]
And Mr Amzalak accepted that, by signing the Payment Instruction, he was giving effect to whatever it said.
It is not necessary to rehearse further the evidence Mr Amzalak gave about this because, in final submissions Mr Condon accepted:
"He didn't even care and your Honour put to me that he was careless and, with great respect, in relation to this document, we would so accept that is the proper characterisation of his conduct." [22]
A copy of the Payment Instruction as signed by Mr Amzalak follows:
Also 30 June 2014, Mr Francis Choy, the CFO of Hudson Resources, received copies of the executed share transfer forms in respect of the transfer by Hudson Resources to AceA of the shares in Tiaro Coal and the transfer by AceA to Hudson Resources of the shares in Mount Adrah.
In his affidavit, Mr Choy said:
"Based on my understanding of the Hudson Resources SPA and Hudson Corporate SPA from reading the documents, and based on my accounting expertise, I recorded:
(a) in the books of Hudson Resources a net receivable from AceA Resources to Hudson Resources of $A 1,051,000 from the sale of the Tiaro shares and the purchase of the Mount Adrah shares; and
(b) in the books of Hudson Corporate a net payable from Hudson Corporate to Mr Aw of $1,050,000 from the purchase by Hudson Corporate of the various companies' shares.
…
On or about 30 June 2014 I was given a copy of a Hudson Resources letter dated 30 June 2014 addressed to KhattarWong LLP headed 'Irrevocable Payment Instructions In Relation to the Sale & Purchase Agreement Dated 27 June 2014 Between AceA Resources and Hudson Resources' (Irrevocable Payment Instruction)…
I read the Irrevocable Payment Instruction. I understood it to be an instruction from Hudson Resources to KhattarWong LLP to pay Mr Aw the amount of $A 1,051,000 which was due to be paid to Hudson Resources from AceA Resources. I took this Irrevocable Payment Instruction as the basis to connect the Hudson Resources SPA and Hudson Corporate SPA, to authorise me to set off, in part, against Hudson Resources $A 1,051,000 proceeds to be received from AceA Resources, the $A 1,050,000 owed by Hudson Corporate to Mr Aw.
I had no conversation with anybody instructing or informing me as to how to record the Hudson Resources SPA, Hudson Corporate SPA and the Irrevocable Payment Instructions in my accounting records. I reached my understanding on the basis of reading the Hudson Resources SPA, Hudson Corporate SPA (both dated 27 June 2014, which were emailed to me at 7.56pm on 27 June 2014), and the Irrevocable Payment Instruction as to the financial effect of the transactions involved. I assumed that the two SPAs had been properly executed by the parties to them."
As I discuss below, despite later receiving and implementing instructions to reverse the entry in Hudson Resource's books showing that AceA had paid the $1,051,000 called for by the First SPA, Mr Choy received no such instructions about these loan account entries.
Subsequent credit entries to the loan accounts show that the loan from Hudson Corporate to Hudson Resources was fully repaid by 1 November 2014.
The following day, 1 July 2014, Mr Rockett sent Mr Juay transfer forms executed by Mr Tan and Mr Rockett on behalf of Hudson Corporate in favour of Mr Aw for the shares referred to in the Second SPA, being shares in Hudson Resources, Raffles Capital, Sovereign Gold and Precious Metal Resources.
The following day, 2 July 2014, Mr Juay returned the documents duly signed by Mr Aw.
On 14 October 2014, the directors of Hudson Resources, including Mr Amzalak, resolved to ratify both the original form of the First SPA (being that executed on 17 June 2014 and bearing date 18 June 2014) and which contained the original wording of cl 3.1(b), and the Amended First SPA, bearing the date 27 June 2014, which contained the revised form cl 3.1(b) and the new 3.1(c) that Mr Juay had sent Mr Tan at 9.27pm on 27 June 2014.
Mr Amzalak, who as I have said, was the only director of Hudson Resources to give evidence before me, annexed an unsigned copy of those minutes to his affidavit. He gave this evidence in cross-examination, first from a question from Mr Hughes and then in response to a question from me:
"Q. So, looking at those documents, you would agree with me, sir, wouldn't you, that the board of Hudson Resources in October 2014 ratified both versions of the agreement; correct?
A. That's what the minutes are saying - you referencing those two attachments. It would be good to have the Chairman's signature. I mean..(not transcribable).. that's just - maybe that's what took place, the ratification, yeah.
HIS HONOUR
Q. Mr Amzalak, you're a director of this company and you've put these minutes into evidence, so why should I doubt that they're accurate?
A. No, I'm saying - I'm just saying it would be good if the Chairman - if we could find the sign line. I can't tell you if anything was changed - on the assumption that nothing has changed, so, I'm assuming the evidence is what it is.
HUGHES
Q. You have no reason to doubt, then, that the board of Hudson Resources ratified both versions of the agreement in 2014; correct?
A. Correct."
Hudson Resources' trial balance for 31 December 2014 included within loan accounts "Intercompany - Hudson Corporate Ltd" a debit dated 27 June 2014 for $1,050,000 described as:
"Fund HCL [23] to acquire RCL [24] HRL [25] SOC [26] PMR [27] share".
As I have mentioned, subsequent credit entries to that loan account show that the loan from Hudson Corporate to Hudson Resources was fully repaid by 1 November 2014.
On 9 December 2014, Herbert Smith Freehills, for Hudson Resources Ltd, wrote to Mr Aw requesting an explanation for the receipt by Mr Aw of the $1,051,000 paid to him as a result of the Payment Instruction.
The letter stated:
"There is a clear inconsistency between the terms of the [First SPA] and the [announcement made by ICP Ltd to the Singapore Stock Exchange on 27 June 2014 [28] ], both of which contemplated payment of [$1,051,000] to Hudson Resources, and the payment of the [$1,051,000] directly to you.
Our client therefore requests an explanation from you of the circumstances in which you came to receive the [$1,051,000], including an assurance that this did not involve a breach of any relevant law by you."
The letter did not suggest that the Payment Instruction was not authorised.
On 17 December 2014 Mr Tan sent a series of emails to Mr Kinstlinger, Mr Amzalak, Mr Kuppanda, Mr Rockett and Ms Louisa Tan [29] . The text of those emails and the time they were sent were:
9.03am:
"To consider:
The contract is $3m for the sale of TCM [30] shares for $2m Mt Adrah and $1m to MA [31] ?
Implies HRS [32] pays MA $1m in fees or what?"
9.09am:
"Write asking MA to explain why HRS [33] provide irrevocable instruction to pay MA $1m? Is it part of the deal?"
9.15am:
"If fees need a tax invoice?"
9.19am:
"MA Holding money on trust for HRS??"
By these emails, Mr Tan appears to be raising for the consideration of the recipients, possible arguments to be deployed to seek to recover from Mr Aw the amount referred to in the Payment Instruction.
Later that day, Mr Amzalak sent a letter to KhattarWong on Hudson Resources letterhead referring to the Payment Instruction, and requesting KhattarWong to remit to Hudson Resources the $1,000 remaining in its trust account, being the difference between $1,051,000 sent to KhattarWong pursuant to the Payment Instruction, and $1,050,000 payable by Hudson Corporate to Mr Aw under the Second SPA.
Mr Amzalak, who signed the Payment Instruction, did not in this letter suggest the Payment Instruction was not authorised.
KhattarWong paid the $1,000 to Hudson Resources during January 2015.
Several years later, Hudson Resources engaged the Singapore Law Firm Allen & Gledhill.
On 8 March 2016 Allen and Gledhill wrote to its parent company, ICP Ltd, suggesting that Mr Aw may have breached the Singapore Stock Exchange Listing Rules by failing to disclose his personal interest in the June 2014 transactions.
Thus, Allen & Gledhill wrote:
"Our client is concerned about the breaches of corporate governance rules and good practices, and the possible violations of the SGX-Catalist Listing Rules arising from a possible failure to disclose the personal interest of [Mr Aw] in relation to the [First SPA] in the [27 June 2014 announcement to the Singapore Stock Exchange [34] ]. The personal interest arises from a letter of undertaking dated 31 January 2014 which Mr Aw personally secured from Raffles Capital Limited." [35]
Allen & Gledhill set out the terms of the 31 January 2014 letter and continued:
"By the terms of the Letter of Undertaking, Mr Aw secured an undertaking for the acquisition of his shareholding interests in the Hudson Group, if it suited him, in 6 months. It was also agreed that Mr Aw's shareholding interests would be acquired at an aggregate value of A$1.050 million. The market value of the said shareholding interests, at the time of the Letter of Undertaking, was about A$681,250. Mr Aw therefore had therefore secured an option to sell his shareholdings at an attractive valuation.
To finance the acquisition of Mr Aw's shareholdings, it was agreed that our client would concurrently sell its shares in Tiaro Coal to Mr Aw or Mr Aw's nominees, or investors introduced by Mr Aw."
In a later letter Allen & Gledhill repeated the point:
"We enclose the letter to KhattarWong dated 30 June 2014 giving the irrevocable instruction to pay the sum of $A1,050,000 payable to Hudson Resources Limited to Mick Aw… This is the final step in the series of transactions, beginning with the purchase of the Tiaro Coal shares by AceA…designed to finance the acquisition of Mr Aw's shareholdings…"
As Mr Hughes submitted, the assertions made in these letters contradict the case Hudson Resources seeks to make before me. Allen and Gledhill were contending that the sale by Hudson Resources of its shares in Tiaro Coal to Mr Aw's nominee was to "finance the acquisition", ultimately by Hudson Corporate, of Mr Aw's shareholdings as set out in the Second SPA.
On 17 May 2018 Hudson Resources sent Mr Juay the letter to which I referred at [132] above.
Mr Juay responded on 23 May 2018 as I have set out at [133] above.
Finally, on 14 June 2018, Mr Beasley sent a letter to Mr Choy on Hudson Resources letterhead asking Mr Choy to adjust Hudson Resources' records to show AceA as still owing Hudson Resources the $1,051,000 referred to in the First SPA.
Mr Choy gave effect to that instruction.
Mr Beasley did not instruct Mr Choy to reverse entries in Hudson Corporate's Loan Account with Hudson Resources to which I have referred at [38] above, no doubt because, by then, Hudson Corporate had repaid the loan.
In his reply submissions, Mr Condon pointed to entries in Hudson Resources books that, he submitted, showed that Mr Choy reversed the loan account entries.
I do not read those records that way; they appear to me to do no more than "reinstate" a receivable from AceA to Hudson Resources. Thus, in his affidavit, Mr Choy, immediately after referring to Mr Beasley's 14 June 2018 instruction, described the effect of the document to which Mr Condon referred in his affidavit. He said the document:
"… records all the accounting entries relating to proceeds from the [First] SPA and the [Second] SPA. This general ledger account reconciliation shows that, as a result of the process of recording the [First] SPA and receipt of $A1,000 from KhattarWong on 29 January 2015, Hudson Resources is owed $A1.05 million from AceA Resources".
Further, the terms of the draft Payment Instruction that Mr Juay sent Mr Tan under cover of his 9.37pm email on 27 June 2014, were clear and constituted a direction by Hudson Resources to KhattarWong to pay the $1,050,000 payable by AceA to Hudson Resources under the First SPA to Mr Aw. It made specific reference to clause 3.1(c).
Neither the version of the First SPA as executed by Mr Amzalak and Mr Rocket on 18 June 2014, nor the version attached to Mr Juay's 9.27pm email to Mr Tan on 27 June 2014 provided for or required any payment to be made to Mr Aw. Indeed neither of those documents required Hudson Resources to pay anyone at all as under those documents Hudson Resources was to receive the $1,050,000.
It was obvious that the effect of the Payment Instruction was to change how the funds due under the First SPA were to be paid on completion.
There was, for those reasons, nothing about the Payment Instruction that could have given any reader of it a misleading impression. Its obvious intent was to give effect to the completion of the First SPA and the Second SPA as simultaneous transactions.
Mr Condon submitted:
"It is not to the point that careful scrutiny of these emails and their attachments may have disclosed the terms of the Purported SPA. The sending of these emails was misleading or deceptive conduct on the part of Mr Juay and AceA because the emails proceeded on the incorrect basis that the terms of the Purported SPA accurately reflected the terms of the agreement between Hudson Resources and AceA; or put another way, that Hudson Resources' board had assented to the payment terms. They therefore were capable of inducing error and therefore misleading or deceptive."
There are a number of points to be made about this submission.
First, it did not require "careful scrutiny" of the emails in question, nor their attachments to disclose the terms of what Mr Condon referred to as "the Purported SPA"; that is the Amended First SPA. Second, I do not accept the submission that Mr Juay's email of 27 June 2014 or 30 June 2014 "proceeded on the basis" or otherwise conveyed that the board of Hudson Resources "had assented to the payment terms". Mr Juay's emails did no more than pass on to Mr Tan, and to Mr Kinstlinger, documents reflecting the agreement that he had made with Mr Tan, as an authorised representative of Hudson Resources, on the evening of 27 June 2014.
Contrary to Hudson Resources' pleading, it is not correct that Mr Juay, Mr Aw and AceA did not inform Hudson Resources that the First SPA had been altered. Nor is it correct that Hudson Resources did not know of the alterations.
To the contrary:
1. Mr Juay's 9.27pm 27 June 2014 email made clear that there had been a change to the First SPA;
2. Mr Juay then expressly explained to Mr Kinstlinger on 30 June 2014 that the insertion of clause 3.1(c) was that change; and
3. the payment to Mr Aw was expressly, and clearly, identified in the Payment Instruction
Further, and as Mr Kinstlinger understood [44] , this conduct must be considered against a background of the undertaking given by Mr Tan under the letterhead of Raffles Capital to Mr Aw on 31 January 2014. [45]
Paragraphs 1 and 2 of that undertaking formed the basis of the First SPA.
Paragraph 3 forms the basis for the Second SPA. As Mr Hughes submitted, the two agreements were thus linked by their origin in that undertaking.
Being the letter set out at [57] above.
Eg Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at 625 [109] (McHugh J); Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 at 341-342 [102] (Gummow, Hayne, Heydon and Kiefel JJ).
Eg Stryke Corporation Pty Ltd v Miskovic [2007] NSWCA 72 at [59] (Santow JA).
Campbell v Backoffice at [25].
See Campbell v Backoffice at [26] and Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Limited (2010) 241 CLR 357; [2010] HCA 31 at [20] (French CJ and Kiefel J).
Butcher v Lachlan Elder Realty at [39] (Gleeson CJ, Hayne and Heydon JJ).
See [146] and [147].
[158] above.
At [159] above.
See [152] above
See [57] above.
See [177] above.
See [179]-[181] and [209]-[213] above.
See [185] above.
Referred to at [201]-[205] above.
See s 236 of the Australian Consumer Law.
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48 at 385 [59] (Mason CJ, Deane, Toohey, Gaudron and McHugh JJ) and see Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (2014) 253 CLR 560; [2014] HCA 14 at [81] (Hayne, Crennan, Kiefel, Bell and Keane JJ).